FGV’s listed status in limbo as Felda mulls new buyout

FOUR years on, there is still no resolution in sight regarding FGV Holdings Bhd’s listed status.

Reports now indicate that a fresh plan is in the works by parent company Federal Land Development Authority (Felda) to take FGV private.

But whatever plans and schemes they come up with, one thing remains clear.

The offerer must raise the buyout price for FGV.

Ideally to a level closer to its net asset value of RM1.67 a share.

Anything less should not, and likely will not, result in a resolution.

That is the name of the game in capital markets.

Takeover rules are at play to protect minority shareholders.

Recall that Felda’s general offer in 2021, for shares in FGV it did not own, was made at RM1.30 apiece.

However, this only resulted in Felda securing 81% of the total shareholding.

The takeover rules state that the offerer must secure 90% acceptance from the shareholders it did not already own at the time of making the offer.

Since Felda made the offer when it held around 50% of FGV’s shares, this means that Felda needs to buy an additional 14% of FGV’s shares to reach the 95% threshold required before it can compulsorily acquire the balance and privatise FGV.

This is still a long way off from the 81% it currently owns.

The issue of shareholding spread is a separate matter.

After making the offer, FGV’s shareholding spread naturally decreased below the 25% requirement.

There is a listing rule that states a company with less than a 10% free float could get delisted, but this is not an assurance of delisting.

This rule is oftentimes used by offerers to scare remaining shareholders into accepting subpar offers.

Bursa Malaysia has been playing its role in pushing FGV to sort out its shareholding spread issue and is no longer granting any further extensions of time.

FGV’s board should be held accountable for addressing this matter.

There are only a few possible solutions here.

One option is for Felda to raise its buyout offer to secure the 95% shareholding and delist the company.

Alternatively, FGV’s board could issue new shares to meet the shareholding spread requirement.